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Thursday, March 31, 2011

529 Savings

Today I learned something new. I learned a little bit about 529 savings accounts. With the recession and all, especially for hard-hit California, costs for everything are rising (did you see my post about bank fees?). The costs for higher education are no exception - rate hikes have been occurring across the board. And it seems that at the same time, drastic cuts have to be made due to budget issues. In fact, it wasn't too long ago that there were protests because of the 30+% increase for the University of California system. So...Saving for higher education is important, because it's not gonna be cheap!

In our Etsy shop, we have a section titled "HANDMADE by the KIDS." We created this section of the shop about a year ago. My daughter (in the 8th grade now) is very academic. For two years in a row, she's attended summer classes on a California State University campus as part of an accelerated program for 6th - 10th graders. Last year, we sold items on Etsy as fundraising for her tuition for the program (and did many other fundraisers). After the tuition was paid, we decided to dedicate an entire section of the shop to items made solely by the kids. Whatever sells from that section, we put toward their scholarship fund for education.

So back to the 529 savings accounts. I just learned about them. They are state-sponsored and earn interest tax-free. Money from these accounts can be used for tuition costs, books, computers - educational expenses. There are two types of plans, prepaid and saving. The prepaid type is only available in certain states. Most states offer the savings type, and there are many options, depending on the state. There's a lot to learn! There's a website (collegesavings.org) that has all the info you need to learn more. Below I've listed a couple of helpful direct links within their site that I visited:

What is a 529? Click HERE to find out the details.What are the advantages of a 529? Click HERE.A College Cost Calculator. Try it out. It will help determine how much to aim for saving.

3 comments
:

Very interesting post! Didn't know about these types of college savings accounts. I just opened a savings account with Aurora Bank for my future family expenses, might consider looking into these college tuition savings for the future, because as you mentioned, it sure will not be cheap!

that's a very noble thing to do- helping the kids. i thought developed countries dont get a 30% increase in education costs- my my that's realy bad news. how can the average income earners afford that.